V. I. Lenin

Seventh Moscow Gubernia Conference of the Russian Communist Party

October 29-31 , 1921[1]

Delivered:29 October, 1921First Published:Published inPravdaNos. 248 and 249, November 3 and 4, 1921; Published according to thePravdatextSource:Lenin’sCollected Works, 2nd English Edition, Progress Publishers, Moscow, 1965,Volume 33, pages 81-108Translated:David Skvirsky and George HannaTranscription\HTML Markup:David Walters&R. CymbalaCopyleft:V. I. Lenin Internet Archive (www.marx.org) 2002. Permission is granted to copy and/or distribute this document under the terms of theGNU Free Documentation License

1Report On The New Economic PolicyOctober 29

Comrades, in reporting on the New Economic Policy, I must start
      with the reservation that I understand this subject differently
      from what many of you here, perhaps, expect; or rather, that I
      can deal with only one small part of this subject. Naturally, on
      this question interest centres mainly on the explanation and
      assessment of the recent laws and decisions of the Soviet
      government on the New Economic Policy. The larger the number of
      these decisions and the more urgent the need for their
      formulation, regulation and summation, the more legitimate the
      interest in such a subject, and as far as I can judge from my
      observations in the Council of People’s Commissars, this
      need is now felt very, very acutely. No less legitimate is the
      desire to learn the facts and figures already available on the
      results of the New Economic Policy. The number of confirmed and
      tested facts is still very small, of course, but nonetheless
      such facts are available. Undoubtedly, to become familiar with
      the New Economic Policy it is absolutely necessary to keep up to
      date on those facts and to try to summarise them. But I cannot
      undertake to deal with either of these subjects, and if you are
      interested in them I am sure you will be able to find reporters
      on them. What interests me is another subject, namely, the
      tactics, or, if one may so express it, the revolutionary
      strategy we have adopted in connection with our change of
      policy; the extent, on the one hand, to which that policy
      corresponds to our general conception of our tasks, and, on the
      other hand, the extent to which the Party knows and appreciates
      the necessity for the New Economic Policy. This is the special
      question to which I should like to devote my talk
      exclusively.

What interests me first of all is this. In appraising our New
      Economic Policy, in what sense can we regard our former economic
      policy as a mistake? Would it be correct to say that it was a
      mistake? And lastly, if it was a mistake, is it useful and
      necessary to admit it?

I think this question is important for an assessment of the
      extent to which agreement prevails in our Party on the most
      fundamental issues of our present economic policy.

Should the Party’s attention be now concentrated
      exclusively on certain definite aspects of this economic policy,
      or should it be devoted, from time to time, at least, to
      appraising the general conditions of this policy, and to the
      question of whether Party political consciousness, Party
      interest and Party attention conform to these general
      conditions? I think the position today is that our New Economic
      Policy is not yet sufficiently clear to large numbers of our
      Party members; and unless the mistake of the previous economic
      policy is clearly understood we cannot successfully accomplish
      our task of laying the foundations and of finally determining
      the direction of our New Economic Policy.

To explain my views and to indicate in what sense we can, and in
      my opinion should, say that our previous economic policy was
      mistaken, I would like to take for the purpose of analogy an
      episode from the Russo-Japanese War, which, I think, will enable
      us to obtain a clearer picture of the relationship between the
      various systems and political methods adopted in a revolution of
      the kind that is taking place in our country. The episode I have
      in mind is the capture of Port Arthur by the Japanese General
      Nogi. The main thing that interests me in this episode is that
      the capture of Port Arthur was accomplished in two entirely
      different stages. The first stage was that of furious assaults;
      which ended in failure and cost the celebrated Japanese
      commander extraordinarily heavy losses. The second stage was the
      extremely arduous, extremely difficult and slow method of siege,
      according to all the rules of the art. Eventually, it was by
      this method that the problem of capturing the fortress was
      solved. When we examine these facts we naturally ask in what way
      was the Japanese general’s first mode of operation against
      the fortress of Port Arthur mistaken? Were the direct assaults
      on the fortress a mistake? And if they were, under what
      circumstances should the Japanese army have admitted that it was
      mistaken so as to achieve its object; and to what extent should
      it have admitted that the assaults were mistaken?

At first sight, of course, the answer to this question would
      seem to be a simple one. If a series of assaults on Port Arthur
      proved to be ineffective—and that was the case—if
      the losses sustained by the assailants were extremely
      heavy—and that, too, was undeniably the case—it is
      evident that the tactics of immediate and direct assault upon
      the fortress of Port Arthur were mistaken, and this requires no
      further proof. On the other hand, however, it is easy to
      understand that in solving a problem in which there are very
      many unknown factors, it is difficult without the necessary
      practical experience to determine with absolute certainty the
      mode of operation to be adopted against the enemy fortress, or
      even to make a fair approximation of it. It was impossible to
      determine this without ascertaining in practice the strength of
      the fortress, the strength of its fortifications, the state of
      its garrison, etc. Without this it was impossible for even the
      best of commanders, such as General Nogi undoubtedly was, to
      decide what tactics to adopt to capture the fortress. On the
      other hand, the successful conclusion of the war called for the
      speediest possible solution of the problem. Furthermore, it was
      highly probable that even very heavy losses, if they were
      inevitable in the process of capturing the fortress by direct
      assault, would have been more than compensated for by the
      result; for it would have released the Japanese army for
      operations in other theatres of war, and would have achieved one
      of the major objects of the war before the enemy (the Russian
      army) could have dispatched large forces to this distant theatre
      of war, improved their training and perhaps gained immense
      superiority.

If we examine the course of the military operations as a whole
      and the conditions under which the Japanese army operated, we
      must come to the conclusion that these assaults on Port Arthur
      were not only a display of supreme heroism on the part of the
      army which proved capable of enduring such huge losses, but that
      they were the only possible tactics that could have been adopted
      under the conditions then prevailing, i. e., at the opening of
      hostilities. Hence, these tactics were necessary and useful; for
      without a test of strength by the practical attempt to carry the
      fortress by assault, without testing the enemy’s power of
      resistance, there would have been no grounds for adopting the
      more prolonged and arduous method of struggle, which, by the
      very fact that it was prolonged, harboured a number of other
      dangers. Taking the operations as a whole, we cannot but regard
      the first stage, consisting of direct assaults and attacks, as
      having been a necessary and useful stage, because, I repeat,
      without this experience the Japanese army could not have learnt
      sufficiently the concrete conditions of the struggle. What was
      the position of this army when the period of fighting against
      the enemy fortress by means of direct assault had drawn to a
      close? Thousands upon thousands of men had fallen, and thousands
      more would fall, but the fortress would not be taken in this
      way—such was the position when some, or the majority,
      began to realise that the tactics of direct assault had to be
      abandoned and siege tactics adopted. Since the previous tactics
      had proved mistaken, they had to be abandoned, and all that was
      connected with them had to be regarded as a hindrance to the
      operations and dropped. Direct assaults had to cease; siege
      tactics had to be adopted; the disposition of the troops had to
      be changed, stores and munitions redistributed, and, of course,
      certain methods and operations had to be changed. What had been
      done before had to be resolutely, definitely and clearly
      regarded as a mistake in order to remove all obstacles to the
      development of the new strategy and tactics, to the development
      of operations which were now to be conducted on entirely new
      lines. As we know, the new strategy and tactics ended in
      complete victory, although it took much longer to achieve than
      was anticipated.

I think this analogy can serve to illustrate the position in
      which our revolution finds itself in solving its socialist
      problems of economic development. Two periods stand out very
      distinctly in this connection. The first, the period from
      approximately the beginning of 1918 to the spring of 1921; and
      the other, the period from the spring of 1921 to the
      present.

If you recall the declarations, official and unofficial, which
      our Party made in late 1917 and early 1918, you will see that
      even at that time we were aware that the revolution, the
      struggle, might proceed either by a relatively short road, or by
      a very long and difficult road. But in estimating the prospects
      of development we in most cases—I can scarcely recall an
      exception—started out with the assumption—perhaps
      not always openly expressed but always tacitly taken for
      granted—that we would be able to proceed straight away
      with socialist construction. I have purposely read over again
      all that was written, for example, in March and April 1918 about
      the tasks of our revolution in the sphere of socialist
      construction,[2]and I am convinced that that was
      really the assumption we made.

This was the period when we accomplished the essential, and from
      the political point of view necessarily the preliminary, task of
      seizing power, setting up the Soviet state system in place of
      the former bourgeois parliamentary system, and then the task of
      getting out of the imperialist war. And this withdrawal from the
      war was, as you know, accompanied by extremely heavy losses, by
      the signing of the unbelievably humiliating Treaty of Brest,
      which imposed almost impossible terms upon us. After the
      conclusion of that peace we had a period—from March to the
      summer of 1918—in which war problems appeared to have been
      solved. Subsequent events showed that this was not the case. In
      March 1918, after the problem of the imperialist war was solved,
      we were just approaching the beginning of the Civil War, which
      in the summer of 1918 was brought closer and closer by the
      Czechoslovak mutiny. At that time—March or April
      1918—in discussing our tasks, we began to consider the
      prospect of passing from methods of gradual transition to such
      modes of operation as a struggle mainly for the expropriation of
      the expropriators, and this, in the main, characterised the
      first months of the revolution—the end of 1917 and the
      beginning of 1918. Even at that time we were obliged to say that
      our organisation of accounting 

and control lagged considerably behind our work and activities in connection with the expropriation of the expropriators. That meant we had expropriated more than we could take account of, control, manage, etc., and thus the question was raised of transferring our activities from the task of expropriating, of smashing the power of the exploiters and expropriators, to that of organising accounting and control, to the, so to speak, prosaic tasks of actual economic development. Even at that time we had to retreat on a number of points. For example, in March and April 1918, the question was raised of remunerating specialists at rates that conformed, not to socialist, but to bourgeois relationships, i. e., at rates that corresponded, not to the difficulty or arduousness of the work performed, but to bourgeois customs and to the conditions of bourgeois society. Such exceptionally high—in the bourgeois manner—remuneration for specialists did not originally enter into the plans of the Soviet government, and even ran counter to a number of decrees issued at the end of 1917. But at the beginning of 1918 our Party gave direct instructions to the effect that we must step back a bit on this point and agree to a “compromise” (I employ the term then in use). On April 29, 1918, the All-Russia Central Executive Committee adopted a decision to the effect that it was necessary to make this change in the general system of payment.[3]

We regarded the organisational, economic work, which we put in
      the forefront at that time, from a single angle. We assumed that
      we could proceed straight to socialism without a preliminary
      period in which the old economy would be adapted to socialist
      economy. We assumed that by introducing state production and
      state distribution we had established an economic system of
      production and distribution that differed from the previous
      one. We assumed that the two systems—state production and
      distribution and private commodity production and
      distribution—would compete with each other, and meanwhile
      we would build up state production and distribution, and step by
      step win them away from the hostile system. We said that our
      task now was not so much to expropriate the expropriators as to
      introduce accounting and control, increase the productivity of
      labour and tighten up discipline. We said this in March and
      April 1918; but we did not ask ourselves in what relation our
      economy would stand to the market, to trade. When in the spring
      of 1918, for example, in our polemics with a number of comrades,
      who were opposed to concluding the Brest peace, we raised the
      question of state capitalism, we did not argue that we were
      going back to state capitalism, but that our position would be
      alleviated and the solution of our socialist problems
      facilitated if state capitalism became the predominant economic
      system in Russia. I want to draw your particular attention to
      this, because I think it is necessary to bear it in mind in
      order to understand the present change in our economic policy
      and how this change should be interpreted.

I shall give you an example which may illustrate more concretely
      and vividly the conditions under which our struggle has
      evolved. In Moscow recently I saw a copy of the privately owned
      publicationListok Obyavleni.[4]After three years of
      our old economic policy thisListok Obyavleniseemed to
      me to be something very unusual, very new and strange. Looking
      at it from the point of view of the general methods of our
      economic policy, however, there was nothing queer about
      it. Taking this slight but rather typical example you must
      remember how the struggle was developing, and what were its aims
      and methods in our revolution in general. One of the first
      decrees at the end of 1917 was that which established a state
      monopoly of advertising. What did that decree imply? It implied
      that the proletariat, which had won political power, assumed
      that there would be a more gradual transition to the new social
      and economic relations—not the abolition of the private
      press, but the establishment of a certain amount of state
      control that would direct it into the channels of state
      capitalism. The decree which established a state monopoly of
      advertising thereby assumed that privately owned newspapers
      would continue to exist as a general rule, that an economic
      policy requiring private advertisements would continue, and that
      private property would remain—that a number of private
      establishments which needed advertising and advertisements would
      continue to exist. That is what the decree on the state monopoly
      of private advertising meant, and it could have meant nothing
      else. There was something analogous to this in the decrees on
      banking, but I shall not go into that, for it would only
      complicate my example.

What was the fate of the decree establishing a state monopoly of
      private advertising issued in the first weeks of the Soviet
      government? It was soon swept away. When we now recall the
      course of the struggle and the conditions under which it has
      proceeded since then, it is amusing to think how naïve we
      were to talk then, at the close of 1917, about introducing a
      state monopoly of private advertising. What sort of private
      advertising could there have been in a period of desperate
      struggle? The enemy, i. e., the capitalist world, retaliated to
      that Soviet government decree by continuing the struggle and by
      stepping it up to the limit. The decree assumed that the Soviet
      government, the proletarian dictatorship, was so firmly
      established that no other system of economy was possible; that
      the necessity to submit to it would be so obvious to the mass of
      private entrepreneurs and individual owners that they would
      accept battle where we, as the state power, chose. We said in
      effect: “We will allow your private publications to
      continue; private enterprises will remain; the freedom to
      advertise, which is necessary for the service of these private
      enterprises, will remain, except that the state will impose a
      tax on advertisements; advertising will be concentrated in the
      hands of the state. The private advertising system, as such,
      will not be abolished; on the contrary, you will enjoy those
      benefits which always accrue from the proper concentration of
      publicity.” What actually happened, however, was that we
      had to wage the struggle on totally different terrain. The
      enemy, i. e., the capitalist class, retaliated to this decree of
      the state power by completely repudiating that state
      power. Advertising ceased to be the issue, for all the remnants
      of what was bourgeois and capitalist in our system had already
      concentrated their forces on the struggle against the very
      foundations of state power. We, who had said to the capitalists,
      “Submit to state regulation, submit to state power, and
      instead of the complete abolition of the conditions that
      correspond to the old interests, habits and views of the
      population, changes will be gradually made by state
      regulation”—we found our very existence in
      jeopardy. The capitalist class had adopted the tactics of
      forcing us into a desperate and relentless struggle, and that
      compelled us to destroy the old relations to a far larger extent
      than we had at first intended.

Nothing came of the decree establishing state monopoly of
      private advertising; it remained a dead letter, while actual
      events, i.e.. the resistance of the capitalist class, compelled
      our state to shift the struggle to an altogether different
      plane; not to the petty, ridiculously petty, issues we were
      naïve enough to dabble in at the end of 1917, but to the
      issue of “To be or not to be?”—to smash the
      sabotage of the former salaried class; to repel the white guard
      army, which was receiving assistance from the bourgeoisie of the
      whole world.

I think that this episode with the decree on advertising
      provides useful guidance on the fundamental question of whether
      the old tactics were right or wrong. Of course, when we appraise
      events in the light of subsequent historical development, we
      cannot but regard our decree as naïve and, to a certain
      extent, mistaken. Nevertheless, it did contain something that
      was right, in that the state power—the
      proletariat—made an attempt to pass, as gradually as
      possible, breaking up as little of the old as possible, to the
      new social relations while adapting itself, as much as possible,
      one may say, to the conditions then prevailing. But the enemy,
      i. e., the bourgeois class, went to all ends to provoke us into
      an extremely desperate struggle. Was this strategically correct
      from the enemy’s point of view? Of course it was; for how
      could the bourgeoisie be expected to submit to an absolutely
      new, hitherto unprecedented proletarian power without first
      testing its strength by means of a direct assault? The
      bourgeoisie said to us, in effect, “Excuse us, gentlemen,
      we shall not talk to you about advertisements, but about whether
      we can find in our midst another Wrangel, Kolchak or Denikin,
      and whether they will obtain the aid of the international
      bourgeoisie in deciding, not whether you are going to have a
      State Bank or not, but an entirely different issue.” Quite
      a lot was written about the State Bank at the end of 1917 but as
      in the case with advertisements it all remained largely a dead
      letter.

At that time the bourgeoisie retaliated with a strategy that was
      quite correct from its point of view. What it said was,
      “First of all we shall fight over the fundamental issue of
      whether you are really the state power or only think you are;
      and this question will not be decided by decrees, of course, but
      by war, by force; and in all probability this war will be waged
      not only by us, the capitalists who have been expelled from
      Russia, but by all those who want the capitalist system. And if
      it turns out that the rest of the world is sufficiently
      interested, we Russian capitalists will receive the assistance
      of the international bourgeoisie.” From the standpoint of
      its own interests, the bourgeoisie acted quite rightly. If it
      had had oven a crumb of hope of settling the fundamental issue
      by the most effective means—war—it could not and
      should not have agreed to the partial concessions the Soviet
      government offered it while contemplating a more gradual
      transition to the new system. “We don’t want your
      transition, we don’t want your new system,” was the
      reply of the bourgeoisie.

That is why events developed in the way they did. On the one
      hand, we had the victory of the proletarian state accompanied by
      a struggle of extraordinary magnitude amidst unprecedented
      popular enthusiasm, which characterised the whole period of 1917
      and 1918. On the other hand, the Soviet government attempted to
      introduce an economic policy that was originally calculated to
      bring about a number of gradual changes, to bring about a more
      cautious transition to the new system. This policy was
      expressed, among other things, by the little example I have just
      given you. In retaliation, the enemy camp proclaimed its
      determination to wage a relentless struggle to decide whether
      Soviet power could, as a state, maintain its position in the
      international system of economic relations. That issue could be
      decided only by war, which, being civil war, was very
      fierce. The sterner the struggle became, the less chance there
      was of a cautious transition. As I have said, in the logic of
      the struggle the bourgeoisie was right from its own point of
      view. But what could we say? We said to the capitalists,
      “You will not frighten us, gentlemen. In addition to the
      thrashing we gave you and your Constituent Assembly in the
      political field, we shall give you a thrashing in this field
      too.” 

      We could not act otherwise. Any other way would have meant the
      complete surrender of our positions.

If you recall the conditions under which our struggle developed
      you will understand what this seemingly wrong and fortuitous
      change meant; why—relying upon the general enthusiasm and
      on ensured political power—we were so easily able to
      disperse the Constituent Assembly; why we at the same time had
      to try a number of measures that meant the gradual and cautious
      introduction of economic reforms; and why, finally, the logic of
      the struggle and the resistance of the bourgeoisie compelled us
      to resort to the most extreme, most desperate and relentless
      civil war, which devastated Russia for three years.

By the spring of 1921 it became evident that we had suffered
      defeat in our attempt to introduce the socialist principles of
      production and distribution by “direct assault", i. e., in
      the shortest, quickest and most direct way. The political
      situation in the spring of 1921 revealed to us that on a number
      of economic issues a retreat to the position of state
      capitalism, the substitution of “siege” tactics for
      “direct assault", was inevitable.

If this transition calls forth complaints, lamentations,
      despondency and indignation among some people, we must say that
      defeat is not as dangerous as the fear to admit it, fear to draw
      all the logical conclusions from it. A military struggle is much
      simpler than the struggle between socialism and capitalism; and
      we defeated Kolchak and Co. because we were not afraid to admit
      our defeats, we were not afraid to learn the lessons that these
      defeats taught us and to do over and over again what had been
      left unfinished or done badly.

We must act in the same way in the much more complicated and
      difficult field of struggle between socialist and capitalist
      economy. Don’t be afraid to admit defeat. Learn from
      defeat. Do over again more thoroughly, more carefully, and more
      systematically what you have done badly. If any of us were to
      say that admission of defeat—like the surrender of
      positions—must cause despondency and relaxation of effort
      in the struggle, we would reply that such revolutionaries are
      not worth a damn.

I hope that, except in isolated cases, nobody will be able to
      say that about the Bolsheviks, who have been steeled

      by the experience of three years of civil war. Our strength lay
      and will lie in our ability to evaluate the severest defeats in
      the most dispassionate manner and to learn from them what must
      be changed in our activities. That is why we must speak
      plainly. This is interesting and important not only from the
      point of view of correct theory, but also from the practical
      point of view. We cannot learn to solve our problems by new
      methods today if yesterday’s experience has not opened our
      eyes to the incorrectness of the old methods.

The New Economic Policy was adopted because, in the spring of
      1921, after our experience of direct socialist construction
      carried on under unprecedentedly difficult conditions, under the
      conditions of civil war, in which the bourgeoisie compelled us
      to resort to extremely hard forms of struggle, it became
      perfectly clear that we could not proceed with our direct
      socialist construction and that in a number of economic spheres
      we must retreat to state capitalism. We could not continue with
      the tactics of direct assault, but had to undertake the very
      difficult, arduous and unpleasant task of a long siege
      accompanied by a number of retreats. This is necessary to pave
      the way for the solution of the economic problem, i. e., that of
      the economic transition to socialist principles.

I cannot today quote figures, data, or facts to show the results
      of this policy of reverting to state capitalism. I shall give
      only one small example. You know that one of our principal
      industrial centres is the Donets Basin. You know that there we
      have some of the largest of the former capitalist enterprises,
      which are in no way inferior to the capitalist enterprises in
      Western Europe. You know also that our first task then was to
      restore the big industrial enterprises; it was easier for us to
      start the restoration of the Donets industry because we had a
      relatively small number of workers there. But what do we see
      there now, after the change of policy last spring? We see the
      very opposite, viz., that the development of production is
      particularly successful in the small mines which we have leased
      to peasants. We see the development of state capitalist
      relations. The peasant mines are working well and are delivering
      to the state, by way of rent, about thirty per cent of their
      coal output. The development of production in the Donets Basin
      shows a considerable general improvement over last
      summer’s catastrophic position; and this is largely due to
      the improvement of production in small mines, to their being
      exploited along the lines of state capitalism. I cannot here go
      into all the data on the question, but this example should
      clearly illustrate to you some of the practical results that
      have been achieved by the change of policy. A revival of
      economic life—and that is what we must have at all
      costs—and increased productivity—which we must also
      have at all costs—are what we are beginning to obtain as a
      result of the partial reversion to the system of state
      capitalism. Our ability, the extent to which we shall be able to
      apply this policy correctly in the future, will determine to
      what extent we shall continue to get good results.

I shall now go back and develop my main idea. Is our transition
      to the New Economic Policy in the spring, our retreat to the
      ways, means and methods of state capitalism, sufficient to
      enable us to stop the retreat and prepare for the offensive? No,
      it is not yet sufficient. And for this reason. To go back to the
      analogy I gave at the beginning (of direct assault and siege in
      war), we have not yet completed the redeployment of our forces,
      the redistribution of our stores and munitions, etc.; in short,
      we are not yet fully prepared for the new operations, which must
      be conducted on different lines in conformity with the new
      strategy and tactics. Since we are now passing to state
      capitalism, the question arises of whether we should try to
      prevent the methods which were suitable for the previous
      economic policy from hindering us now. It goes without saying,
      and our experience has proved it, that that is what we must
      secure. In the spring we said that we would not be afraid to
      revert to state capitalism, and that our task was to organise
      commodity exchange. A number of decrees and decisions, a vast
      number of newspaper articles, all our propaganda and all the
      laws passed since the spring of 1921 have been directed to the
      purpose of stimulating commodity exchange. What was implied by
      that term? What plan of development, if one may so express it,
      did it imply? It implied a more or less socialist exchange
      throughout the country of the products of industry for the
      products of agriculture, and by means of that commodity exchange
      the restoration of large-scale industry as the sole basis of
      socialist organisation. But what happened? You are all now well
      aware of it from your own practical experience, and it is also
      evident from our press, that this system of commodity exchange
      has broken down; it has broken down in the sense that it has
      assumed the form of buying and selling. And we must now admit
      this if we do not want to bury our heads in the sand, if we do
      not want to be like those who do not know when they are beaten,
      if we are not afraid of looking danger straight in the face. We
      must admit that we have not retreated far enough, that we must
      make a further retreat, a further retreat from state capitalism
      to the creation of state-regulated buying and selling, to the
      money system. Nothing came of commodity exchange; the private
      market proved too strong for us; and instead of the exchange of
      commodities we got ordinary buying and selling, trade.

Take the trouble to adapt yourselves to this; otherwise, you
      will be overwhelmed by the wave of spontaneous buying and
      selling, by the money system!

That is why we find ourselves in the position of having to
      retreat still further, in order, eventually, to go over to the
      offensive. That is why we must all admit now that the methods of
      our previous economic policy were wrong. We must admit this in
      order to be able to understand the nature of the present
      position, the specific features of the transition that now lies
      ahead of us. We are not now confronted with urgent problems of
      foreign affairs; nor are we confronted with urgent war
      problems. We are now confronted mainly with economic problems,
      and we must bear in mind that the next stage cannot be a
      transition straight to socialist construction.

We have not been able to set our (economic) affairs in order in
      the course of three years. The devastation, impoverishment and
      cultural backwardness of our country were so great that it
      proved impossible to solve the problem in so short a time. But,
      taken as a whole, the assault left its mark and was useful.

Now we find ourselves in the position of having to retreat even
      a little further, not only to state capitalism, but to the state
      regulation of trade and the money system. Only in this way, a
      longer way than we expected, can we restore economic
      life. Unless we re-establish a regular system of economic
      relations, restore small-peasant farming, and restore and
      further expand large-scale industry by our own efforts, we shall
      fail to extricate ourselves from the crisis. We have no other
      way out; and yet there are many in our ranks who still do not
      understand clearly enough that this economic policy is
      necessary. When we say, for example, that the task that
      confronts us is to make the state a wholesale merchant, or that
      it must learn to carry on wholesale trade, that our task is
      commercial, some people think it is very queer and even very
      terrible. They say: “If Communists have gone to the length
      of saying that the immediate task is to engage in trade, in
      ordinary, common, vulgar, paltry trade, what can remain of
      communism? Is this not enough to make anyone throw up his hands
      in despair and say, ’All is lost’?” If we look
      round, I think we shall find people who express sentiments of
      this kind, and such sentiments are very dangerous, because if
      they become widespread they would give many people a distorted
      view of things and prevent them from appraising our immediate
      tasks soberly. If we concealed from ourselves, from the working
      class, from the masses the fact that we retreated in the
      economic field in the spring of 1921, and that we are continuing
      the retreat now, in the autumn and winter of 1921-22, we would
      be certifying to our own lack of political consciousness; it
      would prove that we lacked the courage to face the present
      situation. It would be impossible to work and fight under such
      conditions.

If an army which found that it was unable to capture a fortress
      by direct assault declared that it refused to leave the old
      positions and occupy new ones, refused to adopt new methods of
      achieving its object, one would say that that army had learnt to
      attack, but had not learnt to retreat when certain severe
      conditions made it necessary, and would, therefore, never win
      the war. There has never been a war in history that was an
      uninterrupted victorious advance from beginning to end—at
      any rate, such wars are very rare exceptions. This applies to
      ordinary wars but what about wars which decide the fate of a
      whole class, which decide 

      the issue of socialism or capitalism? Are there reasonable
      grounds for assuming that a nation which is attempting to solve
      this problem for the first time can immediately find the only
      correct and infallible method? What grounds are there for
      assuming that? None whatever! Experience teaches the very
      opposite. Of the problems we tackled, not one was solved at the
      first attempt; every one of them had to be taken up a second
      time. After suffering defeat we tried again, we did everything
      all over again; if we could not find an absolutely correct
      solution to a problem we tried to find one that was at least
      satisfactory. That is how we acted in the past, and that is how
      we must continue to act in the future. If, in view of the
      prospects before us, there were no unanimity in our ranks it
      would be a very sad sign that an extremely dangerous spirit of
      despondency had lodged itself in the Party. If, however, we are
      not afraid to speak the sad and bitter truth straight out, we
      shall learn, we shall unfailingly and certainly learn to
      overcome all our difficulties.

We must take our stand on the basis of existing capitalist
      relations. Will this task scare us? Shall we say that it is not
      communist? If so, then we have failed to understand the
      revolutionary struggle, we have failed to understand that the
      struggle is very intense and is accompanied by extremely abrupt
      changes, which we cannot brush aside under any
      circumstances.

I shall now sum up.

I shall touch upon the question that occupies many
      people’s minds. If today, in the autumn and winter of
      1921, we are making another retreat, when will the retreat stop?
      We often hear this question put directly, or not quite
      directly. This question recalls to my mind a similar question
      that was asked in the period of the Brest peace. When we
      concluded the Brest peace we were asked, “If you concede
      this, that and the other to German imperialism, when will the
      concessions stop? And what guarantee is there that they will
      stop? And in making these concessions, are you not making the
      position more dangerous?” Of course, we are making our
      position more dangerous; but you must not forget the fundamental
      laws of every war. War itself is always dangerous. There is not
      a moment in time of war when you are not surrounded by
      danger. And what is the dictatorship of the proletariat? It is
      war, much more cruel, much more prolonged and much more stubborn
      than any other war has ever been. Here danger threatens us at
      every step.

The position which our New Economic Policy has created—the
      development of small commercial enterprises, the leasing of
      state enterprises, etc.—entails the development of
      capitalist relations; and anybody who fails to see this shows
      that he has lost his head entirely. It goes without saying that
      the consolidation of capitalist relations in itself increases
      the danger. But can you point to a single path in revolution, to
      any stage and method that would not have its dangers? The
      disappearance of danger would mean that the war had come to an
      end, and that the dictatorship of the proletariat had ceased. Of
      course, not a single one among us thinks that anything like that
      is possible at the present moment. Every step in this New
      Economic Policy entails a series of dangers. When we said in the
      spring that we would substitute the tax in kind for
      requisitioning, that we would pass a decree granting freedom to
      trade in the surplus grain left over after the tax in kind had
      been paid, we thereby gave capitalism freedom to
      develop. Failure to understand this means losing sight of the
      fundamental economic relations; and it means that you are
      depriving yourself of the opportunity to look round and act as
      the situation demands. Of course, the methods of struggle have
      changed; the dangers spring from other sources. When the
      question of establishing the power of the Soviets, of dissolving
      the Constituent Assembly was being decided, political danger
      threatened us. That danger proved to be insignificant. When the
      period of civil war set in—civil war backed by the
      capitalists of the whole world—the military danger, a far
      more formidable danger, arose. And when we changed our economic
      policy, the danger became still greater, because, consisting as
      it does of a vast number of economic, workaday trifles, which
      one usually becomes accustomed to and fails to notice, economics
      calls for special attention and effort and more peremptorily
      demands that we learn the proper methods of overcoming this
      danger. The restoration of capitalism, the development of the
      bourgeoisie, the development of bourgeois relations in the
      sphere of trade, etc.—this constitutes the danger that is
      peculiar to our present period of economic development, to our
      present gradual approach to the solution of problems that are
      far more difficult than previous problems have been. There must
      not be the slightest misunderstanding about this.

We must understand that the present concrete conditions call for
      the state regulation of trade and the money system, and it is
      precisely in this field that we must show what we are capable
      of. There are more contradictions in our economic situation now
      than there were before the New Economic Policy was adopted;
      there is a partial, slight improvement in the economic position
      of some sections of the population, of the few; there is an
      extreme disproportion between economic resources and the
      essential needs of other sections, of the
      majority. Contradictions have increased. And it goes without
      saying that in making this very sharp change we cannot escape
      from these contradictions at one bound.

In conclusion, I should like to emphasise the three main points
      of my report. First, the general question—in what respect
      must we admit that our Party’s economic line in the period
      preceding the New Economic Policy was wrong? By quoting the
      example of what had occurred during a certain war I tried to
      explain the necessity of passing from assault to siege tactics,
      the inevitability of assault tactics at first, and the need to
      realise the importance of new fighting methods after the assault
      tactics have failed.

Next, the first lesson, the first stage which we had reached by
      the spring of 1921—the development of state capitalism on
      new lines. Here certain successes can be recorded; but there are
      still unprecedented contradictions We have not yet mastered this
      sphere of activity.

And third, after the retreat from socialist construction to
      state capitalism, which we were obliged to make in the spring of
      1921, we see that the regulation of trade and the money system
      are on the order of the day. Remote from communism as the sphere
      of trade may seem to be, it is here that a specific problem
      confronts us. Only by solving that problem can we get down to
      the problem of meeting economic needs that are extremely urgent;
      and only in that way shall we be able to restore large-scale
      industry—by a longer and surer way, the only way now open
      to us.

These are the main factors in the New Economic Policy that we
      must always bear in mind. In solving the problems of this policy
      we must clearly see the fundamental lines of development so as
      to be able to keep our bearings in the seeming chaos in economic
      relations we now observe, when, simultaneously with the break up
      of the old, we see the still feeble shoots of the new, and often
      employ methods that do not conform to the new conditions. Having
      set ourselves the task of increasing the productive forces and
      of restoring large-scale industry as the only basis for
      socialist society, we must operate in a way that will enable us
      to approach this task properly, and to solve it at all
      costs.

2Closing Speech October 29

Comrades! Before replying to the observations submitted in
      writing I should like to say a few words in reply to the
      comrades who have spoken here. I should like to point to what I
      think is a misunderstanding in Comrade Larin’s
      speech. Either I did not express myself clearly, or else he did
      not understand me properly; but he linked the question of
      regulation, which I dealt with in my speech, with the question
      of regulating industry. That is obviously wrong. I spoke about
      regulating trade and the money system and compared it with
      commodity exchange. To this I must add that if we want our
      policy, our decisions and our propaganda and agitation to be
      effective, and if we want to secure an improvement in our
      propaganda, agitation and decrees, we must not turn our backs on
      recent experience. Is it not true that we spoke about commodity
      exchange in the spring of 1921? Of course, it is; you all know
      it. Is it not true that commodity exchange, as a system, proved
      to be unsuited to the prevailing conditions, which have given
      rise to the money system, to buying and selling for money,
      instead of commodity exchange? There can be no doubt about this;
      the facts prove it. This answers both Comrade Stukov and Comrade
      Sorin, who spoke here about people imagining mistakes. Here is a
      striking example not of an imaginary, but of a real mistake.

The experience of our economic policy during the recent period,
      that commenced with the spring, has shown that in the spring of
      1921 nobody challenged the New Economic Policy and that the
      whole Party, at congresses and conferences and in the press, had
      accepted it absolutely unanimously. The controversies that had
      raged previously did not affect the new, unanimous decision in
      the least. This decision was based on the assumption that by
      means of commodity exchange we could achieve a more direct
      transition to socialist construction. But at present it is clear
      that we must go by a roundabout way—through trade.

Comrades Stukov and Sorin complained that there was a lot of
      talk about mistakes and begged us to refrain from inventing
      them. Of course, it is a very bad thing to invent mistakes; but
      it is utterly wrong to brush practical problems aside, as
      Comrade Gonikman does. He delivered quite an oration on the
      theme that “historical phenomena could not assume any
      other shape than they have done”.That is absolutely
      incontrovertible, and, of course, we have all learnt this from
      the ABC of communism, the ABC of historical materialism, and the
      ABC of Marxism. Here is an argument based on these lines. Was
      Comrade Semkov’s speech a historical phenomenon, or not? I
      maintain that it was. The very fact that this historical
      phenomenon could not assume any other shape than it did proves
      that nobody has invented mistakes and that nobody maliciously
      wanted members of the Party to give way—or maliciously
      wanted to permit them to give way—to despondency, dismay
      and dejection. Comrades Stukov and Sorin were very much afraid
      that the admission of mistakes would be harmful in one way or
      another, wholly or partly, directly or indirectly, because it
      would spread despondency and dejection. The purpose I had in
      mind in giving these examples was to show that the crux of the
      matter is this—has the admission of mistakes any practical
      significance at the moment? Should anything be changed after
      what has happened, and had to happen? First we launched an
      assault; and only after that did we commence a siege. Everybody
      knows that; and now the application of our economic policy is
      being hindered by the erroneous adoption of methods that would,
      perhaps, be excellent under other conditions, but which are
      harmful today. Nearly all the comrades who spoke here entirely
      avoided this subject although this, and this alone, is the point
      at issue. My best ally here proved to be Comrade Semkov, because
      his speech was a vivid example of this mistake. Had Comrade
      Semkov not been here, or had he not spoken here today, the
      impression might have remained that Lenin was inventing
      mistakes. But Comrade Semkov very definitely said:
      “What’s the use of talking to us about state trade!
      They didn’t teach us to trade in prison.” Comrade
      Semkov, it is quite true that we were not taught to trade in
      prison! But were we taught to fight in prison? Were we taught
      how to administer a state in prison? Were we ever taught the
      very unpleasant business of reconciling the different
      People’s Commissariats and of co-ordinating their
      activities? We were not taught that anywhere. We were not taught
      anything in prison. At best, we studied ourselves. We studied
      Marxism, the history of the revolutionary movement, and so
      forth. In that respect, for many of us the time we spent in
      prison was not lost. When we are told: “They did not teach
      us to trade in prison", it clearly shows that those who say it
      have a mistaken idea of the practical objects of the
      Party’s struggle and activities today. And this is the
      mistake of employing methods suitable for an
      “assault” when we are in the period of
      “siege”.Comrade Semkov revealed the mistake that is
      being made in the ranks of the Party. This mistake must be
      admitted and rectified.

If we could rely on military and political
      enthusiasm—which undoubtedly has been a gigantic
      historical force and has played a great role that will affect
      the international working-class movement as well for many years
      to come; if this enthusiasm—with a certain degree of
      culture, and with our factories in a better
      condition—could help us to pass straight on to socialist
      construction, we would not now engage in anything so unpleasant
      as business calculation and the art of commerce. It would not be
      necessary. As things are, however, we must engage in these
      matters. Why? Because we are directing, and must direct,
      economic development. Economic development has brought us to the
      position where we must resort not only to such unpleasant things
      as leasing, but also to this unpleasant business of trading. It
      was to be expected that this unpleasant situation would give
      rise to despondency and dejection. But who is to blame for that?
      Is it not those who have given way to dejection and despondency?
      If the economic situation in which we find ourselves as a result
      of the sum total of conditions, economic and political,
      international and Russian, is such that the money system and not
      commodity exchange has become a fact, if it has become necessary
      to regulate the trade and defective money system that exist
      today, shall we Communists say that it has nothing to do with
      us? That would indeed be the most pernicious despondency, would
      express a mood of utter despair, and would make all further work
      impossible.

The situation in which we are carrying on our work has not been
      created by ourselves alone; it is bound up with the economic
      struggle and our relations with other countries. Things so
      turned out that last spring we had to discuss the question of
      leasing, and today we have to discuss the question of trade and
      the money system. To shirk this question by arguing “that
      they did not teach us to trade in prison” means to give
      way to inexcusable despondency, means shirking our economic
      task. It would be much more pleasant to capture capitalist trade
      by assault, and under certain circumstances (if our factories
      were not ruined and if we had a developed economy and culture)
      it would not be a mistake to launch an “assault", i. e.,
      to pass straight on to commodity exchange. In the present
      circumstances, however, the mistake we make is that we refuse to
      understand that another method of approach is necessary and
      inevitable. Nobody is inventing this mistake; it is not a
      mistake taken from history—it is a lesson that will help
      us to understand what can and must be done at the present
      time. Can the Party successfully accomplish the task that
      confronts it if it approaches it on the principle that
      “they did not teach us to trade in prison” and that
      we don’t want any commercial calculations? There are lots
      of things that we did not learn in prison, but which we had to
      learn after the revolution; and we learnt them very well.

I think it is our duty to learn to understand commercial
      relations and trade; and we shall begin to learn this, and
      finally master it, when we begin to talk about it without
      beating about the bush. We have had to retreat so far that the
      question of trade has become a practical question for the Party,
      a question of economic development. What dictates our transition
      to a commercial basis? Our environment, our present
      conditions. This transition is essential to enable us speedily
      to restore large-scale industry, link it up speedily with
      agriculture and organise a correct exchange of products. In a
      country with a better developed industry all this would take
      place much quicker; in our country this follows a longer,
      circuitous road, but in the end we shall attain our goal. And
      today we must be guided by the tasks that the present and
      immediate future pose before us, before our Party, which has to
      direct the whole state economy. We can no longer speak of
      commodity exchange today because we have lost it as a sphere of
      struggle. That is an incontrovertible fact, no matter how
      unpleasant it may be to us. Does that mean we must say there is
      nothing else for us to do? Nothing of the sort. We must
      learn. We must acquire the knowledge needed for the state to
      regulate commercial relations—it is a difficult task but
      not an impossible one. And we shall carry it out because we have
      carried out tasks that were just as new, necessary and
      difficult. The co-operative trade is something difficult but not
      impossible; we have to understand this thoroughly and get down
      to serious work. That is what our new policy boils down to. To
      date we have already put a small number of enterprises on a
      commercial footing; at these enterprises wages are paid
      according to the prices on the open market, and they have gone
      over to gold in their settlements. But the number of such
      economic units is insignificant; in most of the others there is
      chaos, a serious discrepancy between wages and living
      conditions; state supplies for some have ceased and for others
      have been reduced. What is the way out? The only way is to
      learn, adapt ourselves and resolve these problems properly,
      i. e., in conformity with the conditions obtaining.

That is my reply to the comrades who have spoken about
      today’s talk, and now I shall reply briefly to some of the
      notes submitted.

One of them reads: “You refer to Port Arthur. But
      don’t you see the possibility of our being Port Arthur
      besieged by the international bourgeoisie?”

Yes, comrades. I have already said that war itself is always
      dangerous; that we must never embark on war without bearing in
      mind the possibility of defeat. If we are defeated, then, of
      course, we shall find ourselves in the deplorable position of
      Port Arthur. But in my speech I had in mind the Port Arthur of
      international capitalism, which is being besieged, and other
      armies besides our own are taking part in this siege. In every
      capitalist country there is a steadily growing army that is
      besieging this Port Arthur of international capitalism.

A comrade asks: “What will be our tactics on the morrow of
      the social revolution if it breaks out next year, or the year
      after?” If it were possible to answer such questions it
      would be quite easy to make revolutions, and we would make any
      number of them all over the place. But such questions cannot be
      answered, because we cannot say what will happen in six
      months’ time, let alone next year, or the year after. It
      is as useless to put such questions as to attempt to decide
      which of the belligerents will find itself in the deplorable
      position of the fortress of Port Arthur. The only thing we know
      is that in the long run the fortress of the international Port
      Arthur must inevitably be captured, because the forces that will
      capture it are growing in all countries. The main problem that
      confronts us today is how to retain the possibility of restoring
      large-scale industry under the extremely difficult conditions in
      which we now find ourselves. We must not shun commercial
      accounting, but must understand that only on this basis can we
      create tolerable conditions that will satisfy the workers as
      regards wages, employment, etc. Only on this commercial basis
      will it be possible for us to build up our economy. This is
      being hindered by prejudice and by reminiscences of
      yesterday. Unless we take this into account we shall fail to
      carry out the New Economic Policy properly.

Questions like the following are also asked, “Where is the
      last line of retreat?” I have other questions of the same
      type, “How far can we retreat?” I anticipated this
      question and said a few words about it in my report. This
      question reflects a mood of despondency and dejection, and is
      absolutely groundless. We heard the same sort of question at the
      time we concluded the Brest-Litovsk peace. It is wrong to put
      such a question, because only when we have pursued our new
      policy for some time shall we have material on which to base our
      reply to it. We shall go on retreating until we have completed
      our education; until we have made our preparations for a
      definite offensive. I cannot say more than that. It is very
      unpleasant to retreat. But when heavy blows are being struck,
      nobody stops to ask whether it is pleasant or unpleasant: the
      troops retreat, and nobody is surprised. Nothing useful will
      come of asking how long we shall go on retreating. Why
      anticipate hopeless situations? Instead of doing that, we must
      get down to definite work. We must closely examine the concrete
      conditions, the concrete situation, decide what position we can
      hold—a river, a hill, a bog, a railway station. Because
      only when we are able to hold our ground shall we be able to
      pass to the offensive. We must not give way to despondency; we
      must not shirk the problem by shouting propaganda slogans, which
      are all very well in their proper place, but which in the
      present case can do nothing but harm.

[1]This Conference
      was held on October 29-31, 1921, and was attended by 637
      delegates.

It debated 1) the international and domestic situation, 2) the
      report of the gubernia economic conference, 3) the report on the
      work of the Moscow Committee of the R C P.(B.), 4) the report of
      the Auditing Commission, and 5) the report of the Control
      Commission. Moreover, it heard a report on the purging of the
      Party in Moscow and Moscow Gubernia, and on other
      questions.

Lenin delivered his report on the New Economic Policy at the
      first sitting on October 29.

[2]Lenin has in mind
      his articles:The Chief Task
      of Our Day,The
      Immediate Tasks of the Soviet Government,Left-Wing Childishness and the
      Petty-Bourgeois Mentalityand others.

[3]See Lenin,Collected Works,Six Theses on the Immediate Tasks
      of the Soviet Government

[4]Listok
      Obyavleni(Moskovsky Listok Obyavleni[Moscow
      Advertising Sheet]) was published privately in Moscow from
      October 1921 to February 1922.